Friday, 30 May 2014

When the Credit Crunch broke, Treasury officials calculated that the UK debt had reached the staggering total of £1 trillion. This means that, per capita (per head of population), the UK had the highest level of debt of all the G20 countries. Fortunately at this time, Scotland's oil revenues were pouring into the Treasury at the rate of £60 per second, and with reserves in the North Sea valued at 2008 prices at £1.5 trillion, we were spared the ignominy of being placed at the bottom of the wood pile in the company of the likes of Greece.When the Credit Crunch broke, the Labour party was in charge, but in the General Election which followed, the Tories became the largest party and they took over. As time moved on, and there were no signs of the UK climbing out of the financial pit, the Tories became desperate, so they introduced what became known as "quantitative easing", which in simple terms means artificially pumping money which really doesn't exist into the economy. As this was taking such a long time in showing any improvements, they then decided that the best way to get the economy moving was to stimulate the housing market, so a series of measures were launched including the "Right to Buy", a way of getting people onto the housing ladder with government financial assistance. With the first signs of recovery, London bankers voted themselves sky-high bonuses – a massive 35% increase, whilst the rest of us were still struggling to make ends meet. The European Banking Union has said that the UK has now 2,714 bankers earning over 1 million Euros (£833,000). Contrast that with Germany (the largest economy in Europe) 212, France 117, Italy 109 and Spain 100. It is not surprising that British bankers will fall foul of new EU Regulations which will cap bonuses to one year's salary. Chancellor George Osborne has filed a complaint against the EU about this and in September 2013 the Treasury went a step further in lodging legal action on the grounds that the EU has gone beyond its remit. The cunning bankers have already drawn up plans to side step the rules by handing out increased monthly salaries instead of bonuses. Sadly nothing has been learned from the Credit Crunch. Meantime, with the Scottish Referendum date looming, and a UK election coming up in 2015, the Tories claimed that the Credit Crunch was over and such headlines appeared in the Tory press as "Thanks to Osborne, Great Britain is great once more". The truth is that in the year 2014, the Chancellor borrowed £114.8 billion simply to balance his budget. As in previous years this will not be repaid, but added to the National Debt which since the Credit Crunch still continues to grow, having now reached the total of £1.43 trillion. This can just about be coped with now as interest rates are low, but if rates were to rise significantly it wouldn't be another "Better Together" scare story if the term "UK Insolvency" came into the equation.When Tory claims were debated in the Commons, Opposition spokesman Ed Balls got to his feet planning to prove that the recovery was all "Smoke and Mirrors", only to be greeted by 300 jeering Tory MPs, this continuing as long as he remained on his feet (all pre-planned and orchestrated of course), so that not a word of what he said could be heard. It was no surprise when he threw down his papers in disgust, so that nothing of what he planned to say was recorded and shown in Hansard. So much for this so-called "cradle of democracy". Only with Independence can Scotland escape from this mockery that the UK calls democracy.With interest rates so low, it was inevitable that in the City, house prices would soon rise, but this has happened at an unprecedented level. As at 20 May 2014, the average house sale price in London has risen to £460,000 (25% above what they were at, before the Credit Crunch broke). In contrast, house prices in Scotland have risen by a mere 0.8% and in Northern Ireland by 0.3%, still far below what they were before the Credit Crunch.The traditional practice down the years to deal with "London overheating" has been to increase interest rates. Whilst this proved successful, it had devastating results for Scotland. When any down-turn in the UK economy occurs, Scotland has always been the last to go into recession and last to come out. Time and time again this coincided with a big hike in interest rates (due to London overheating) at the very time when Scotland needed low interest rates. When Gordon Brown was Chancellor, he let it slip that this is the price Scots have to pay (with increased unemployment and bankrupt businesses) for suppressing the "prowling fat-cats" in the city of London. So much for "Better Together".Mark Carney has repeated several times in the last few days – "Interest Rates cannot be raised as the recovery is so precarious". So what can be done? Ideas circulating include ending the right to buy (which will slow down the housing recovery in most other areas), but this only accounts for 3% of the housing recovery so far. Banks are being told to put tight limits on what they lend, but this will have only limited effect, and not stop cash laden foreign speculators coming on the scene and buying up properties in London to sell them again in a few months' time at a handsome profit. This was not the outcome Mark Carney wished to happen; and the problem can be firmly laid at the door of his employers at Westminster.One of the Tory boasts is that the UK economy is growing three times faster than its European neighbours, soon to make it the leading economy in Europe. When you analyse the claim it is quite meaningless. As explained at the beginning of this article, when the Credit Crunch broke, the UK was deep in trouble so, as the UK struggles to crawl out of the financial pit, our rate of growth is bound to be greater than countries such as Denmark, Norway and Germany which were hardly touched at all by the Credit Crunch. Some years ago, Poland, for a while, led the way in European growth, coming from a position of virtual bankruptcy. The Tories made much political capital over lending poor Ireland £10 billion. A glance at the OECD National Wealth League now shows Ireland at 7th place, whilst the UK languishes at 17th place! Even "Bankrupt" Iceland overtook the UK last year. Balls "Smoke and Mirrors" is surely a gentle way to put it. Of one thing I am certain: Mark Carney is having some sleepless nights.[Footnote added 13 June 2014] Mark Carney, during his sleepless nights, has
decided that the only way out of his dilemma is to raise Interest Rates this
Autumn.

About Me

After completing ‘Highers’ in school, I joined the Civil Service in Inverness in the Accountant and Comptroller General’s Branch. Several quick promotions took me to the Head Office in London, and further promotions to the General Accounting Division, with links to the Treasury. This involved me in the preparation of National Budgets.
I also was entrusted to handle the most confidential investment papers of Her Majesty the Queen and personally repaid to her the income tax deducted on these investments, which at that time the Monarch was not required to pay.
It was whilst working on Government finance that I became aware of the appalling waste of resources on weapons of mass destruction, which could never be used without causing the end of civilisation. On retiring from the Civil Service I joined the Campaign for Nuclear Disarmament (CND), originally serving as Liaison Officer of the Highland Federation of twenty-two CND Groups. I was then elected National Convener of the Scottish Campaigns' Committee and served as a member of the Scottish National Executive. I am currently Vice President of Scottish CND.